Philadelphia Ordinance Provides Restaurants with a Six-Month Eviction Moratorium and Rental Relief
On December 9, 2020, Philadelphia Mayor Jim Kenney signed into law an ordinance that prevents independent restaurant proprietors from being evicted for the next six months and suspends the imposition of fees related to delinquent rent payments.
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The ordinance is designed to provide much-needed relief to Philadelphia restaurants struggling to pay rent due to the impact of COVID-19 and the numerous ever-changing restrictions on dining. When the pandemic hit in March, Philadelphia enacted a moratorium on evictions that covered small businesses with no more than 100 employees. That temporary ban on evictions expired in August, making the new moratorium vital to the survival of many Philadelphia restaurants, according to its supporters.
Eviction Moratorium
To qualify for the new 180-day eviction moratorium, a restaurant must meet the following requirements:
- The restaurant must be licensed as a food establishment.
- It must occupy the premises pursuant to a commercial lease, without a written lease, or with a lease which may be terminated under State law.
- It must be a non-chain restaurant, operating no more than three total restaurants with the same name in Philadelphia.
- The restaurant must have fewer than 100 employees at the location seeking protection under the ordinance.
and
- The restaurant owner must demonstrate one of the following:
- A loss of revenue of at least 50% for any two-month period between the start of the pandemic and January 1, 2021, compared to the time period of April 2019 through May 2019.
or
-
- For restaurants not in operation for the full period of April through May 2019—a loss of revenue of at least 50% for any two-month period between the start of the pandemic and January 1, 2021, compared to the time period of January 2020 through February 2020, or any portion of such period that the restaurant was operating.
Protection under the ordinance will apply to qualified restaurant tenants that have provided their landlords with a food establishment certificate of hardship. Under the ordinance, the only acceptable basis for eviction is to intervene in the case of a threat of imminent harm by a restaurant tenant.
Rental Relief
Only under very limited circumstances is it permissible for a landlord to charge fees or penalties for delinquent rent payments. All of the following conditions must be met:
- The landlord shows it has incurred costs or fees as a direct result of the restaurant tenant’s delinquent payment or non-payment of rent.
- The landlord’s rental business has suffered a loss of revenue that would satisfy the lost revenue criteria listed above.
and
- The landlord allows the restaurant tenant to repay past due rent over a twelve-month period.
Notice and Repayment Plans
The ordinance also provides that for one year following the expiration of the moratorium, so long as a restaurant tenant has provided the requisite food establishment certification of hardship, a landlord may not take any steps toward eviction unless it provides a notice of intent to evict at least 30 days prior to taking any such steps. In addition, the ordinance requires any landlord that has been provided a food establishment certificate of hardship to offer a repayment plan for past due rent.
The COVID-19 Task Force at Klehr Harrison stands ready to assist you in your business and legal needs. We will continue to provide additional information and guidance as the COVID19 situation develops.
Author Adrienne C. Beatty is an associate in the Corporate & Securities Department at Klehr Harrison.